AUSTRIA / EuroWire / — Austria lost its last top sovereign credit rating after Morningstar DBRS downgraded the country to AA (high) from AAA, ending its remaining triple A assessment among major agencies. The rating agency changed the trend to stable. It also confirmed Austria’s short term foreign and local currency issuer ratings at R-1 (high). The action puts Austria outside the highest sovereign rating tier.
Morningstar DBRS cited weaker debt metrics and high budget deficits in its rating action. It said Austria’s fiscal position has deteriorated since the pandemic. Public spending remains above earlier levels, while interest costs have risen. The downgrade applies to both long term foreign currency and local currency issuer ratings. Austria remains in a high credit grade category, despite losing the top rating.
The cut follows earlier moves by other rating agencies. S&P Global Ratings has Austria at AA+ with a stable outlook. Fitch Ratings downgraded Austria to AA in June 2025. Moody’s Ratings has Austria at Aa1 with a negative outlook. Scope Ratings affirmed Austria at AA+ in 2025 and changed its outlook to negative. Morningstar DBRS had been the final top tier rating.
Fiscal pressure drives downgrade
Austria’s fiscal data has remained under close review. The European Commission’s spring 2026 forecast put the general government deficit at 4.2% of GDP in 2025. It projected deficits of 4.1% in both 2026 and 2027. The same forecast put gross public debt at 81.5% of GDP in 2025, rising to 83.4% in 2026 and 84.9% in 2027.
Austria also faces European Union budget scrutiny. The Council of the European Union opened an excessive deficit procedure for Austria in July 2025. The decision followed a 4.7% budget deficit in 2024. EU fiscal rules set a 3% of GDP reference value for deficits. The Council recommended a path for Austria to end the excessive deficit by 2028.
Debt path remains central
The Federal Ministry of Finance has said Austria’s 2026 general government deficit remains expected at 4.2% of GDP. It said the 2025 deficit came in at 4.2%, better than the 4.5% level expected when the double budget was prepared. The ministry said strict budget execution and consolidation measures supported the result. It also cited risks from a weaker economic outlook.
Austria’s economy returned to growth in 2025, with real GDP expanding 0.6%. The European Commission expects the same growth rate in 2026 and 0.9% in 2027. Inflation remains part of the fiscal backdrop. The forecast put inflation at 3.6% in 2025, 3.0% in 2026 and 2.5% in 2027. The downgrade keeps attention on Austria’s sovereign credit rating, budget deficit and public debt.